ELIZABETH JACKSON: As the Federal Government gears up for another week of budget hard sell and political horse-trading to get its budget passed, last night the Prime Minister addressed a group of writers in Sydney and conceded that it had been a difficult week.

TONY ABBOTT: I know these are tough times, but you in this room tonight are collectively the custodians of our country's heart and soul. And that's why, as Prime Minister of this nation, I think it is important for me to be here tonight, to be with you in your work and particularly to be with you in the challenges of these times.

Now I know that we've just been through a budget process, and it's been a difficult process - it has been a difficult process.

ELIZABETH JACKSON: The Prime Minister Tony Abbott speaking in Sydney last night. Meantime at least one rehabilitation specialist is warning today that an unintended consequence of the Federal Government's budget could be the creation of a new underclass in Australia.

Dr Caroline Howe, a lecturer in rehabilitation counselling at Sydney University, says she agrees that there are too many people on government pensions but cutting them off without adequate support, she says, could be socially disastrous.

Dr Howe warns that thousands of Australians on workers compensation could be adversely affected by the new 'earn or learn' approach.

She says in New South Wales and some other states, recent legislation will force workers' compensation recipients onto Newstart or the Disability Support Pension, and these people, who are deemed to have some capacity for work, will also be told to earn or learn.

CAROLINE HOWE: Workers' comp now looks for a level of capacity in a worker, and when the worker has around 15 hours of capacity, they can be exited from the workers' comp scheme. So you will then have this group of people moving through from a workers' comp scheme that have been job detached for many, many years; they don't have any recent skills or experience; and now there'll be no government support for them as far as I can tell.

ELIZABETH JACKSON: How well or ill-equipped are these injured workers, do you think, to actively seek employment or to sign up to some sort of course?

CAROLINE HOWE: It seems like a fantastic incentive to say 'earn or learn', but you're taking people that have been that disengaged from the workforce for a number of years that there's fear, there's anxiety, there's stress involved.

And if you actually have a look at workers' comp stats, you can see that oftentimes the physical injury is the last problem that you need to deal with in the rehab field. What you need to deal with are all the real secondary psych issues that come along.

ELIZABETH JACKSON: How attractive is an aged, injured worker to a potential employer?

CAROLINE HOWE: I would say not very attractive at all.

So we now have this problem of older workers, and then you have all the stereotypes around injured people. Once you collapse those together, again, there's nothing in place at the moment that helps employers deal with stereotypes around injury, stereotypes around aging, stereotypes around psychological health, which comes as a result of having sustained injury for a long time. If I'm now found not eligible for a disability support pension, I'm also carrying a workers' comp claim, and I'm 50, where do I go to get help?

ELIZABETH JACKSON: You've been working as a consultant meeting with injured workers and trying to talk to them and entice them back into the workforce. What have they been saying to you about this budget and the implications for them?

CAROLINE HOWE: For most of these workers, there's just fear. For an injured worker who is that disengaged from politics in general, all they know is that I've got very little now, and now I've got nothing.

ELIZABETH JACKSON: What are the social implications do you think of this budget decision?

CAROLINE HOWE: We will see far more people possibly moving into situations where they're homeless. I think that there'll be far more pressure on services such as, you know that look after - hostels and we could potentially see higher rates of crime, higher rates of substance abuse - because when people can't cope, they're going to revert to something that's a little bit more desperate than where they already were.

And if you're already feeling desperate, and then you know that that $200 a week is going to be taken away from you, it will cause people to respond in a way that they probably never even imagined was possible.

You're creating a new class of people. You're creating people that aren't even under the poverty line. There's this social desperation that could possibly evolve that we can't even anticipate yet.

From the Archives

Around 500 Indigenous people fought in the First World War, and as many as 5,000 in the second. But many Aboriginal and Torres Strait Islander diggers who made it home received little or no recognition for their contribution. On Anzac Day, 2007, the first parade to commemorate their efforts and bravery was held in Sydney. Listen to our report from that day by Lindy Kerin.